Market Snapshot

The Indian stock market entered the Republic Day holiday on a somber note, following a significant correction in the previous trading session on Friday, January 23. The BSE Sensex settled at 81,537.70, down 769.67 points or 0.94%, while the Nifty 50 ended at 25,048.65, losing 241.25 points or 0.95%. The broader market faced even steeper declines, with the BSE Smallcap index sliding over 2%.

Currency markets added to the domestic headwinds as the Indian Rupee hit a fresh record low of 91.96 against the US Dollar. The weakness was attributed to persistent dollar demand and the ongoing liquidation of Indian equities by foreign portfolios.

Institutional Flows: Cash Market

The latest provisional data highlights a near-perfect offset between the two major institutional pillars of the Indian market. While Foreign Institutional Investors (FIIs) remained in aggressive exit mode, Domestic Institutional Investors (DIIs) continued to absorb the supply.

• Foreign Institutional Investors (FIIs): Net sellers of equities worth ₹4,113.38 crore.
• Domestic Institutional Investors (DIIs): Net buyers of equities worth ₹4,102.56 crore.

The relentless selling by FIIs has been a recurring theme in January 2026, driven by a combination of global risk-off sentiment and specific domestic triggers.

Derivatives Market Activity

In the F&O segment, FII activity suggested a cautious stance with a heavy reliance on hedging through options.

• Index Futures: FIIs recorded a net sell-off of ₹1,929.25 crore, indicating a bearish outlook on the benchmarks for the short term.
• Index Options: FIIs were net buyers to the tune of ₹21,659.70 crore, likely reflecting protective put buying or volatility plays ahead of the Budget week.
• Stock Futures: Net buying was marginal at ₹39.80 crore.

Key Drivers and Outlook

The market sentiment is currently being dictated by a "perfect storm" of domestic legal challenges and macroeconomic anticipation.

• Adani Group Under Pressure: Heavyweight Adani Group stocks witnessed selling between 5% and 10% after reports emerged that the US SEC requested court approval to personally serve summons to Gautam Adani and Sagar Adani regarding alleged bribery schemes.
• Pre-Budget Jitters: With the Union Budget scheduled for February 1, 2026, investors are adopting a "wait-and-watch" approach. Market participants are looking for clarity on capital gains tax structures and infrastructure spending.
• Technical Breakdown: Nifty has slipped below its 200-day Exponential Moving Average (EMA) for the first time since April 2025. Analysts suggest that if the 24,900 support level is breached when trading resumes on Tuesday, the index could test the 24,600 mark.

Trading is set to resume on Tuesday, January 27, with volatility expected to remain high as the monthly expiry and the Budget presentation converge.

TAGS: FII, DII, Stock Market, Institutional Investors, Nifty, Sensex

Tags: FII DII Stock Market Institutional Investors Nifty Sensex